When Cindy Miller started searching for the perfect franchise in
1993, she had just one stipulation: "Anything but fast
food." After two years spent considering a variety of
businesses, she and her husband, Jim, opened a Blimpie Subs &
Salads shop in November 1995.

Even though she initially thought fast food wasn't right for
her, Miller, who now owns two shops in Terre Haute, Indiana, found
that it was the best business for her. "It has been going
really well," says Miller. "I'm enjoying the work and
we've been very successful. Our first store has done well since
the day it opened."

During her long search for the perfect franchise, Miller learned
a number of important lessons, including the necessity of keeping
an open mind.

"We looked at several businesses, but found that a Blimpie
franchise fit our needs the best," she says of the 33-year-old
company, which is the second largest submarine-sandwich franchisor
in the world. "The market wasn't oversaturated, and the
company is established, but positioned for growth."

Miller also discovered that no two franchises are the same, just
as no two potential owners are alike. The perfect franchise for one
person might be a poor choice for another.

"Choosing the perfect franchise is no simple task,"
says Mark Siebert, president of Francorp, a franchise-development
and consulting firm in Chicago. "The decision should be made
carefully, because it's one you have to live with."

While many potential franchisees start out looking for the
perfect franchise by examining various businesses, they're
looking in the wrong direction, says Siebert. "You don't
make a decision by examining businesses first," he says.
"You start out by examining yourself."

The Life of a Franchisee

Your first step is to make certain being a franchisee is right
for you. Although as a franchisee you are essentially your own
boss, you may not be as unfettered as an independent
entrepreneur.

"The advantage of being a franchisee is that someone else
has taken a lot of the risks in the business and has perfected and
refined a system," Siebert points out. "To be successful,
you must follow a prescribed set of rules."

"An independent entrepreneur makes all the decisions,
whereas a franchisee listens and follows a game plan," adds
John Campbell, CEO of Franchise Masters, a franchise-development
and consulting company in Minneapolis.

One thing remains the same for entrepreneurs and franchisees,
though: Both are responsible for their own success. "Don't
think that because you become a franchisee you'll automatically
become successful," says Campbell. "The franchisor is
only providing the tools; the rest is up to you."

What Do You Want from a Business?

If you decide you are able to follow a game plan, your next step
is to do some soul-searching to discover the type of business that
best suits you. This inner examination includes considering your
goals and objectives, personality, likes and dislikes, strengths
and weaknesses and personal circumstances, including finances.

Answering the following questions will help you get an
indication of what type of franchise would be right for you:

Are you comfortable in a sales role? If selling
isn't your thing, don't buy a business that will involve
heavy sales activity.

Do you work well with the public? A restaurant isn't
a good choice if you don't like greeting customers, unless you
have a partner and can stay behind the scenes in the kitchen.

Do you work well with employees? This is an important
consideration if you will need to staff your business.

Do you want to sell a product or a service? Do you like
to perform services, such as housecleaning or car repair, or do you
prefer to offer a tangible product, such as bagels?

Do you mind getting dirty? If getting grubby turns you
off, don't buy a business like a quick-lube franchise, a
janitorial service or a landscaping business.

Why are you buying a franchise in the first place? Do
you want to amass retirement savings and create a business to pass
on to your children? Or do you simply want a steady job? To
accumulate a large amount of money, you will probably have to
invest in a newer franchise that has the potential for high
earnings, as opposed to a more predictable, established franchise
that pays you a moderate salary.

What working hours do you prefer? If you are averse to
working long hours seven days a week until the business is
established, stay away from retail and restaurant ventures.
Likewise, if you want your weekends free, don't go into real
estate, which requires working Saturdays and Sundays. If you prefer
working days, stay away from a janitorial-service business. Most
cleaning occurs between the hours of 6 p.m. and midnight.

What are your personal interests and hobbies? We tend to
do best with what we love. A hobby franchise involves a hobby or
pastime which you enjoy, such as a baseball-card shop, a kite
store, a Jazzercise studio or a craft- and-gift boutique. Do you
have a hobby that you can pair up with a franchise? If so, look at
possible related franchises, but do so with a level head.

"Although there are many hobby businesses, such as aerobic
franchises, they tend to be financially limited," Siebert
says. "If you just want to get paid for what you like to do,
then such a business may be fine, but if you want to make a great
deal of money, you're better off getting a different franchise
that meets your financial needs."

Can you start a business that will enable you to use
previous contacts? If you've been in the corporate world
for years and have built an impressive roster of contacts in the
human-resources field, it would be a shame to not put that contact
list to good use.

Do you have children and need a kid-friendly atmosphere?
If you would like your children to learn from the business, a
bookstore, a restaurant or an accounting business might be an
appropriate choice.

New or Established Franchise?

An important consideration is whether the franchise is new or
well-established. Each has its benefits and its drawbacks.

Established franchises have a number of advantages in their
favor, including name recognition, a tested business-operation plan
and many other successful franchises for the new franchisee to look
to for encouragement, direction and inspiration.

Some of the negatives of such a business include a possibly
oversaturated market and a lack of prime locations, which make it
more difficult for the new franchisee to be profitable. While an
established franchise may have diminished profitability because of
increased competition, the potential for growth and the capturing
of market share for a new franchise is high.

If you sign on with a franchise in its early years, you'll
tend to get the prime locations, and if the business is successful,
your return is likely to be higher than if you'd chosen an
established franchise. There is the risk that a new franchise
won't survive, however, leaving you without financial support.
There is also a risk that the concept of a new franchise won't
survive, and your business will fail. Because the franchise is new,
there are fewer proven guidelines for you to follow and, as a
result, you can be less sure of what works. An established
franchise comes with a "road map" of instructions and
guidelines that have been proven to work.

Whether you choose a new franchise or an established one will
depend on your personality. "Individuals who choose newer
franchises tend to have a higher risk tolerance," says
Siebert. "Because the concept is untried, they are making a
much more risky investment. They may also need a high return on
their investment, which only a new franchise can generally
provide."

When Doug Bauguss chose to buy an Impressions On Hold
International franchise, he did so partly because it is a new
business that has a high potential for growth.

"You hear people talking about ground-floor opportunities,
and that's what this is," says Bauguss, who started his
customized, on-hold phone-advertising business when he bought the
territorial rights to the entire Phoenix area in February 1995.
"The market is unlimited and the potential for growth is
phenomenal."

Steve Dunkle also got in on the ground floor of The Connoisseur,
a gift-service franchise based in Redondo Beach, California, that
operates through retail stores. The Connoisseur features premium
wines and champagnes with personalized messages printed on each
label. This February, he and his wife, Diane, opened their The
Connoisseur franchise (the franchisor's sixth store) in
Portsmouth, New Hampshire, which happens to be the first to open
east of Colorado.

"I chose a new franchise because, at heart, I'm an
entrepreneur, and the higher the risk, the higher the potential for
reward," Dunkle says. "I wanted a franchise that could be
grown--one with no limitations--so that I could create a retirement
fund. With the business still in its infancy, it can be lucrative
for myself and others involved in the start-up."

Elements of a Promising Franchise

Regardless of whether a franchise is new or established,
it's important portant that it has made its mark with a niche
in its industry and that it is still open for growth.

After deciding to buy a fast-food franchise, the Millers
narrowed their choice down to Blimpie because the company
hadn't already oversaturated the market in their town.

"There was a burger joint on every corner, but the
sub-and-salad market was still really open," says Miller.
"From our research, we could tell that Blimpie was set for
growth. So far our predictions have come true. We've just
opened a second store."

Another important consideration is the relationship between the
franchisor and its franchisees. "A golden rule is that the
franchisor should treat the franchisee as a working partner, and
never like someone they look down on," says Campbell.
"The franchisor has to understand the equation of franchising,
and that the franchisee is the most important part of that
equation."

A big part of Bauguss' evaluation of Impressions On Hold
involved taking a close look at the relationship between the
franchisees and the franchisor.

"I really liked the fact that they are dependent on their
franchisees," Bauguss says. "They couldn't exist
without us, and we couldn't exist without them. The
relationship is win-win."

To find out what the relationship is like between franchisees
and franchisors in a particular system, talk to existing franchise
owners and visit the corporate headquarters to meet with company
officials.

"Don't talk to salespeople, who you'll probably
never see again," says Siebert. "Meet the people you will
be working with. Make sure that you have confidence in their
ability and product, and that you can get along with them, because
this will be a long-term relationship."

When he was deciding whether or not to purchase a Connoisseur
franchise, Dunkle and his wife flew to Southern California to meet
with the company's president, Sandy French.

"After meeting with Sandy, we knew the business was right
for us," says Dunkle. "Sandy allows creativity within
certain guidelines, which really appealed to us. I could tell that
the opportunity was very much a win-win, team-oriented
one."

When calling existing franchisees, don't ask them easy
questions such as, Do you like the franchise? "Ask
quantifiable questions, such as: `How much support do you get from
the franchisor?'" suggests Siebert. "How frequently
does a company representative visit? What services do they provide
to you? How much money are you making? How long did it take you to
break even?"

Miller called 30 franchisees before deciding to buy a Blimpie
sandwich shop. "I asked them a lot of questions, such as if
they were happy with what they were doing, what their sales and
expense numbers were and what kind of support they got," she
says.

How to Investigate a UFOC

An important part of deciding whether or not a franchise is
right for you is investigating the Uniform Franchise Offering
Circular (UFOC). Required by the Federal Trade Commission, this
document discloses extensive information about the franchise,
covering 23 subjects.

The UFOC should be reviewed carefully, because it provides
information on some important points, such as your anticipated
earnings. Franchisors aren't allowed to make earnings claims,
so you must scrutinize the UFOC to get a good understanding of what
kind of earnings you can expect.

Also look at the company's audited financial statements,
because they can give you a big clue as to the average revenue of a
unit.

"If a franchisor reports $1 million in annual royalty
revenues and they charge a 10 percent royalty, then the total
network volume is going to be $1 million divided by 10 percent, or
$10 million," Siebert explains. "Divide that by the
number of franchises in the system and that will give you the
average reported revenue per franchisee."

Siebert cautions that the above formula is less reliable when
the business is a new, fast-growing franchise, but it can give you
a point of reference to consider.

Another thing to look for in the UFOC is current or past
litigation against the franchisor. What is the nature of the
litigation? Although allegations don't necessarily mean the
lawsuit is founded, litigation is a red flag. Also make sure the
franchisor hasn't been involved in a bankruptcy.

You can also find in the UFOC an indication of the financial
strength of the franchisor to withstand a downturn in the market,
as well as the franchisor's profitability and significant net
worth.

The UFOC includes a list of all the franchisees currently in the
system. Experts suggest contacting as many franchisees as you
possibly can and asking them about their earnings and
profitability.

Another critical item to examine is the franchisee-turnover
rate. The UFOC lists how many franchisees have left the system in
the last three years. If only one percent or two percent have bowed
out, the franchise is probably a low-risk venture.

"If the amount of franchisees who have left is
significantly higher," says Siebert, "then you need to
start looking at the business from the standpoint of how much risk
you are really taking on."

Finally, before signing, have a lawyer experienced in franchise
law review the UFOC and related contracts to make sure you are
getting a fair deal.

Whats Hot In Franchising?

Looking for a franchise opportunity that is popular now and
likely to remain in demand? Consider the following franchise
opportunities suggested by franchise consultants John Campbell and
Mark Siebert.